Lue koko yhtiöanalyysi

Company analysis
FIT Biotech
IPO Research
2.6.2015
Contents
FIT Biotech
3

3
Investment highlights
Company
4-10

Market
4

Product
5

Business model
6

Current portfolio development phase
7

Financials and shareholders
8

Management
9

Risks
10
Valuation
11-16

Summary of application valuations
11

One-off income and costs
12

Comparables
13

Recent deals in therapy development
14

HIV and Tuberculosis
15

Gene therapy and animal vaccines
16

HPV
17
Disclaimer
18
Contact Information
19
2
FIT Biotech
Investment highlights



Market for biopharmaceuticals is growing rapidly. Gene therapy solutions
could potentially replace existing treatments such as therapeutic antibodies
currently selling for over $60 billion and growing over 10% annually. New
therapies involve inserting modified genes into human body to induce
desired therapeutic molecules inside cells. FIT Biotech has a proprietary
patented technology GTU (Gene Transport Unit) for transporting desired
genes into human cells. GTU is considered a superior vector in comparison
to currently used viral-vectors in terms of safety and to conventional DNA
plasmid in terms of efficacy. The technology has been proven safe by FDA
and EMA as demonstrated in previous studies by FIT Biotech related to
HIV.
GTU technology inducing the desired treatment
GTU technology can be applied in a vast number of treatments and it can
have several application areas of significant market potential. If found to be
successful the potential market for GTU based drugs can reach up to $90
billion. FIT Biotech business model is based on early partnering with codevelopers to minimize the capital need and lower the development risks.
FIT Biotech is a early stage biotechnology company with no current
revenue and no binding partnership contracts with big pharmaceuticals. The
cash flow is negative and possible future refinancing need cannot be
excluded. The GTU technology can have correlation risks e.g. if the
technology fails in one application it could lower the interest in the
technology in other applications.
•
Modified genes
•
Modified genes inserted into the GTU
vector
•
GTU vector carrying modified genes
•
GTU vector penetrates the cell
membrane of the target cell
•
GTU vector transfers new gene inside
the cell and its nucleus
•
Cell produces protein copying
inserted genes
•
Desired molecule treatment begins
FIT Biotech is a high risk high reward opportunity in fast developing
biopharmaceuticals segment. The company GTU technology offers advantages
to current vector solutions. The business model is based on partnering to lower
the capital need of research and development offering a possibility for positive
cash flows in accelerated phase.
FIM Research
Aaron Kaartinen (09) 6134 6430, aaron.kaartinen@fim.com
Kim Gorschelnik (09) 6134 6422, kim.gorschelnik@fim.com
Source: Company, FIM
3
Company
Market
Biopharmaceuticals
Biological pharmaceuticals market
Biopharmaceutical is a medical product that is manufactured or extracted from biological
sources. This is distinct from traditional pharmaceutical products that are chemically
synthesized. Major classes of biopharmaceuticals are recombinant antibodies, vaccines
and still developing field of gene therapy.
The benefit of biological pharmaceuticals is a more targeted treatment that enables a safer
and more effective therapy than traditional chemical pharmaceuticals.
The total market of biological pharmaceuticals is over 200 billion euros. The annual growth
rate of biological pharmaceuticals is estimated to be over 10% and over twice the growth
rate of the traditional chemical pharmaceuticals market.
FIT Biotech’s GTU technology is a solution for transporting genes into human body and it
can be utilized as a part of a biopharmaceutical vaccines and gene therapy. GTU provides
the transportation method for the treatment gene. Therefore, the relevant market for FIT
Biotech is exceptionally large as the GTU technology has potential to be applied as gene
transportation method in many possible applications of biopharmaceuticals.
Therapeutic antibodies
Therapeutic antibodies are used in immunotherapy where the antibodies are used to bind
target cells which may stimulate the patient’s immune system to attack those cells.
Therapeutic antibodies is one of the largest segments of biological pharmaceuticals.
DNA vaccines
DNA vaccination is based on injecting genetically engineered DNA to produce an immune
response to protect the organism. Currently the market is at very early stage with only few
products in the market for human or animal use. Therefore, the expected average growth
rate for the human DNA vaccines is over 50%.
Source: Company, FIM
4
Company
Product
Gene Transfer Unit (GTU) a new generation non-viral gene delivery technology
FIT Biotech was founded in 1995 and it has been focused on HIV vaccines. The HIV
vaccine has reached phase II/a in 2009. During the research process in 2001 the
company discovered a new proprietary technology for gene transport (“vector”) and has
shifted its strategy to seek opportunities in licensing the vector. The Gene Transfer Unit
(GTU) technology is based on E2-protein and is considered to be a new generation nonviral vector for delivery of DNA into cells. GTU technology can be a vector solution for
gene therapy and a number of vectored vaccines. The technology has been patented in
2003 and the patents are valid through 2023 – 2024.
Methods of antibody treatment are traditional antibodies and future gene therapy.
Traditional antibodies are manufactured outside the human body. Antibodies are then
injected intravenously resulting in high but quickly decreasing concentration of antibodies
in blood. Gene therapy is based on producing the antibody inside the human body. This
results in more stable and longer lasting therapeutic concentration of antibodies.
Competing methods of transporting the genes are conventional DNA and viral vectors.
Conventional DNA consists of plain DNA plasmid. The transportation method is safe but it
has been found to be ineffective due to low transfection capacity and therefore nonfunctional transport mechanism. Viral vector as part of gene therapy is effective but is
considered an unsafe method of transportation.
GTU technology is considered safe by FDA and EMA. Furthermore, it is considered to be
also effective as part of gene therapy solution. See the attached table for comparison
between gene transportation technologies.
Source: Company, FIM
Gene transportation technologies
Attribute
GTU
Viral vectors
Conventional
DNA
Safety
Excellent
Satisfactory
Excellent
Transfection
Good
Excellent
Poor
Transient
efficacy
Excellent
Excellent
Poor
Controlled
efficacy
Excellent
Satisfactory
Poor
Utility in vaccines
Mediocre
Mediocre
Satisfactory
Utility in gene
therapy
Excellent
Excellent
Poor
Manufacturing
complexity
Good
Mediocre
Good
Manufacturing
cost
Good
Mediocre
Good
5
Company
Business model
Biotech companies earnings model in general
In comparison to big pharmaceutical companies biotechnology companies are focused on
researching and developing pharmaceuticals. Typically, biotech companies develop the
pharmaceuticals to commercialization phase and license to / or become acquired by a “big
pharma” company.
The focus on the early phases of development results in high development risks and many
biotech companies fail to reach the market at all. The risk profile is significantly different
from established big pharmaceutical companies which focus on financing development
projects and marketing the pharmaceuticals in the end market.
FIT Biotech position in pharmaceutical value chain
FIT Biotech focus
Scientific
research
Pre-clinical
Partner focus
Phase 1
Phase 2
Phase 3
End market
FIT Biotech’s business model is based on licensing GTU
FIT Biotech’s business model is based developing the drug candidates through preclinical
phase or up to clinical phase 1-2 and on finding a partner to co-develop the drug
candidates in early stage to minimize the need of capital. This is based on the previously
tested GTU technology, which can be applied in various applications. However, this
business model is highly dependent on finding partners with financial capability for clinical
trials at all three phases.
Lower capital requirement
Higher development risk
Higher capital requirement
Lower development risk
Revenues consist of signing fees, milestone payments and royalty payments. The
company receives signing fees after signing of a licensing contract. Milestone payments
are received after certain milestones e.g. proof of clinical efficacy. Royalty payment starts
after commercialization of the drug using GTU technology.
Revenues are difficult to estimate. Possible revenues during next 5 years depend on
negotiations with possible licensing partners and progress in the development stages for
each drug application.
FIT Biotech is a long-term case where the focus in the coming years is on possible news
on important events. The value of the company increases in steps after progress in
licensing negotiations and advances in development stages.
Source: Company, FIM
6
Company
Current portfolio development phase
Application
Description
Development phase
Discovery
Pre-clinical
Phase I
Phase IIa
X
X
Phase IIb
Current phase
Phase III
At market
HIV
HIV immunotherapy
X
X
Tuberculosis
Therapeutic
tuberculosis
vaccine
X
Partially
completed
Preclinical studies required.
Memorandum of understanding signed
with Minhai Biotechnology in 2014
Animal
Vaccines
Therapeutic and
preventive
animal vaccines
X
Partially
completed
Preclinical studies required. Heads of
Agreement signed with QYH Biological
Corporation (2015)
Gene
Therapy
Antibody therapy
via gene therapy
X
Partially
completed
Preclinical studies on-going with
Icosagen
Genetic
Adjuvant
Substances to
boost vaccine
efficiency
X
Partially
completed
Preclinical studies required
HPV
Therapeutic HPV
vaccine
X
Partially
completed
Preclinical studies required
Ebola
Therapeutic
Ebola vaccine
X
Partially
completed
Preclinical studies required
Source: Company, FIM
Originally developed as a therapeutic
vaccine. Phase II results published in
2010. Repositioned as immunotherapy
and requires new phase II trials.
Member of consortium to apply EU
Horizon 2020 research program grant.
7
Company
Financials and shareholders
Financials
FIT Biotech financials are typical to development phase biotechnology company with very
limited revenue and negative retained earnings related to incurred costs of research and
development.
Convertible loans to be converted to equity during the IPO mostly at subscription price
(conditional to the IPO).
Capital loans from Tekes have been partially forgiven in 2015 (amounting to €11,8 million
in IPO).
Shareholders
FIT Biotech shareholders include anchor investors including Sitra (Finnish State
development fund), several large Finnish mutual pension funds and Inveni Secondaries
(life science VC fund). Furthermore, as a result of earlier private placement the company
has more than 200 private investors. Total number of pre-IPO investors amount to over
250.
Shareholder structure
Financials
P&L
Revenue
Other operating income
2010
0,0
0,9
2011
0,0
0,8
2012
0,0
2,2
2013
0,1
0,5
2014
0,0
0,0
Materials
Services
Personnel costs
Other costs
EBITDA
0,0
0,0
-0,4
-0,6
-0,1
0,0
0,0
-0,4
-0,6
-0,1
0,0
0,0
-0,6
-1,1
0,4
0,0
-0,1
-0,6
-0,7
-0,7
0,0
0,0
-0,5
-0,6
-1,1
Depreciation & Amortization
EBIT
-1,2
-1,3
-2,4
-2,5
-2,5
-2,1
-1,8
-2,6
-0,8
-2,0
Net interest expenses
Taxes
-0,1
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
Net profit
-1,2
-2,5
-2,2
-2,6
-2,0
2010
4,1
0,0
0,1
4,2
2011
4,3
0,0
0,1
4,4
2012
2,9
0,0
0,0
2,9
2013
1,7
0,0
0,0
1,7
2014
1,2
0,0
0,0
1,2
Receivables
Cash and cash equivalents
Current assets
0,2
1,3
1,5
0,3
1,2
1,4
0,3
0,3
0,6
0,1
0,1
0,2
0,1
0,2
0,3
Total assets
5,7
5,8
3,5
1,9
1,5
2,1
2,2
-24,8
-1,2
-21,7
10,7
2,2
-26,1
-2,5
-15,6
12,9
0,0
-28,5
-2,2
-17,7
12,9
0,0
-30,7
-2,6
-20,3
14,2
0,0
-33,3
-2,0
-21,0
8,5
15,4
2,6
0,9
27,4
0,8
15,4
4,2
0,9
21,4
0,8
16,4
3,3
0,8
21,3
3,6
18,3
0,0
0,3
22,2
3,6
18,3
0,4
0,2
22,5
5,7
5,8
3,5
1,9
1,5
Balance sheet
Intangible assets
Tangible assets
Investments
Fixed assets
Share Capital
Other equity
Retained earnings
Net profit
Equity
Convertible loans
Capital loans
Loans from financial institutions
Current liabilities
Liabilities
Source: Company, FIM
Total equity & liabilities
8
Company
Management
Management team
Board of directors
Dr. Kalevi Reijonen, CEO
Rabbe Slätis, Chairman of the Board
Over 30 years of international experience in pharma and biotech industry (e.g. Spectrum
Medical Sciences, Farmos and Orion).
M.Sc. (Chemistry), has served as CEO of Novartis Participations AB and Sandoz Oy . Several
Chairman of the Board, Managing Director and Director of Marketing and Sales positions
during the last 25 years.
Prof. Mart Ustav, Chief Scientific Officer
Tina Nyfors, Board member
Developing an HIV vaccine in FIT Biotech since 2000. International experience from US
and Sweden as a molecular biologist.
M.Sc., MBA, CIR, CEO and owner of Locnet Oy. Multiple Board memberships both in Finland
and internationally. Corporate Secretary of ADB Holdings, plc, Switzerland. 20 years
experience in corporate finance and executive management positions in private and public
listed companies.
Liisa Laitinen, VP Finance & Admin.
Over 30 years experience in international business in Finland and abroad (e.g. Paloheimo,
Dresdner Bank, Bank of America).
Erkki Pekkarinen, Board member
Jani Koskinen, VP Production
MBA, has worked in BioFund Management since December 1999. Various positions in
investment activities and financial administration.
VP of production of FIT Biotech since 2005. 10 years of experience in process
development and biological production.
Jussi Seitsonen, VP Quality Assurance
QA and QC manager of FIT Biotech since 2000.
Juha Vapaavuori, Board member
MSc., currently serves as Leading Expert in Life Sciences Team at the Finnish National Fund
for Research and Development (Sitra). With a background in organic chemistry, previously
Project Manager in Orion Corporation Fermion.
Dirk Teuwen, Board member
VP, Societal Corporate Responsibility and Senior Safety Advisor at UCB, Belgium.
Scientific advisory board
Dr. Richard A. Koup, Chief, Immunology Laboratory Vaccine Research Center, NIH (USA).
Prof. Giuseppe Pantaleo, Professor of Medicine and Chief of the Laboratory of AIDS
Immunopathogenesis at the Centre Hospitalier Universitaire Vaudois (CHUV), University of
Lausanne (Switzerland).
Dr. Roger Le Grand, Head of the Department of Immuno-Virology of the Institute of
Emerging Diseases and Innovative Therapies at CEA (France).
Prof. A. Stanley Plotkin, Emeritus Professor of the University of Pennsylvania (USA) and
Executive Advisor to Sanofi Pasteur (France).
Prof. Michael M. Lederman, Professor of Medicine at Case Western Reserve University
(USA).
Source: Company, FIM
9
Company
Risks
General risks
Biotechnology companies in general have very high risk profile in comparison to that of a
typical listed company. Generally these companies have limited revenues and negative
cash flows requiring additional financing rounds.
FIT Biotech is an early stage development company and there is a significant risk that the
company is unable to develop a product that reaches commercialization. All the
applications are in early development stage. The most advanced R&D process is related
to HIV (phase II/a). Illustrative example of development probabilities from FDA data is
presented in the graph on the right. Approximately 8% of new drug applications reach the
market.
Furthermore, the company currently has a negative cash flow and it is possible that the
company is unable to raise funds in the future, if needed.
Indicative probabilties of reaching market
100 new drug applications
40 to phase I
30 to phase II
14 to phase III
Company specific risks
There is a risk that FIT Biotech will not be able to achieve collaboration agreements with
potential partners. These collaborative agreements are critical to develop. Without these
agreements the development of the application will stop. At this point FIT Biotech has
preliminary agreements with a couple of companies. However there are no big pharma
agreements regarding GTU technology at the moment. These kind of agreements and
partners will be most likely needed to finalize the most expensive phases of the R&D
process and the commercialization of applications to the end market.
9 to approval
8 to market
FIT Biotech’s business case is very dependent on the GTU technology. This leads to
correlation risk at least in some extent, in our opinion. Failure in pipeline for one
application could lower the interest of the technology in other applications.
Estimates of future cash flows is very complex and requires many assumptions critical to
the value. Also the assumptions contain lots of uncertainties. Therefore, the resulting
valuation is subject to high risk and should be considered as indicative.
Source: Company, FIM
10
Valuation
Summary of application valuations
Valuation principles
Risk adjusted valuation of applications
The valuation is based on risk-adjusted discounted cash flow for each of the GTU
application areas. Furthermore, cash flows from one-off income and costs are discounted
separately. A separate market potential benchmarking is used to compare the valuation
with listed Nordic peer companies (page 13) and recent deals in therapy development has
been listed (page 14).
Application
The valuation is based on estimating the market size of the potential application. Current
market size is expected to grow at initial market growth rate that is declining to a long term
market growth of 1,5%.
HIV
Tuberculosis
Gene
therapy
Anim al
vaccines
HPV
17,5
7,0
61,0
5,2
1,7
Initial market grow th
1,5 %
3,5 %
12,0 %
8,0 %
3,0 %
Initial market share
1,0 %
1,0 %
1,0 %
2,0 %
9,0 %
Market penetration rate
3,5 %
1,0 %
1,0 %
2,0 %
5,0 %
Top market share
14,0 %
5,0 %
5,0 %
6,0 %
15,0 %
Market size (EUR billion)
Based on information received from the management we have estimated the
commercialization date, the top market share of each application and the rate of yearly
market penetration.
Royalty-%
7,0 %
6,0 %
7,0 %
6,0 %
6,0 %
Propability of approval
27,6 %
8,3 %
8,3 %
8,3 %
8,3 %
The estimated royalty rate is then applied to the revenue stream of the applications market
share to derive the income for FIT Biotech. The patent expiration date is set to be 10 years
and the market share is expected to decline to zero in the subsequent 10 years.
Joint propability
The revenue stream is then discounted at 25% rate reflecting the high risks associated
with the revenue estimate. The net present value is then adjusted to reflect the probability
of entering into licensing arrangement and passing the required phases to enter the
markets. Licensing arrangement probability is based on management estimates and the
probability of passing different drug phases is based on FDA data on historical attrition
rates.
70 %
70 %
70 %
80 %
70 %
19,3 %
5,8 %
5,8 %
6,6 %
5,8 %
Commercialization year
2020
2019
2019
2019
2023
End of patent
2030
2029
2029
2029
2033
Discount rate
25 %
25 %
25 %
25 %
25 %
DCF value
156
28
446
38
12
Propability adjusted DCF value
30
2
26
3
1
Propability of licensing
Valuation summary of application valuations and post-IPO market cap
Summary of valuation results
The risk adjusted valuation for the application portfolio is in the range of €42-86 million.
Net estimated one-off income (signing & milestone fees) and operating costs are (€5)
million. Resulting enterprise value range is €37-81 million.
Post-IPO net debt with €5 million cash subscription equals approximately €6 million
including capital loans (TEKES) of €11,8 million and cash of €5,7 (excluding IPO costs).
Resulting post-IPO market cap range is €31-75 million and €1,40-3,44 per share (€1,293,17 fully diluted). See graph on beside.
Valuation details are presented in the following pages.
NB. Estimates of future cash flows is very complex and requires many assumptions critical to the value.
Also the assumptions contain lots of uncertainties. Therefore, the resulting valuation is subject to high
risk and should be considered as indicative
Source: Company, FIM
11
Valuation
One-off income and costs
One-off income
We have separately estimated the one-off income related to the commercialization of GTU
applications. The income estimate is based on the fees paid by the development partner.
We expect the fees to include a signing fee and a milestone fee related to the final
approval and commercialization of the developed drug. Our conservative estimate does
not include intermediary fees as most of the phase I-III research and development would
be done by the development partner.
We have estimated the signing fee to be €5 million per application and commercialization
milestone fee to be €10 million per application. These fee estimates are adjusted to reflect
the probability of licensing (signing fee) and the probability of passing the development
phases (milestone fees).
Operating costs
Discounted one-off income and costs
2015
2016
2017
2018
2019
0,0
0,0
3,5
HIV
Tuberculosis
3,5
Gene therapy
3,5
Animal vaccines
4,0
3,5
HPV
Total signing income
0,0
11,0
3,5
3,5
0,0
Milestone income
Operating costs are expected to consist of marketing efforts and limited research and
development. Long term cost inflation is expected to be 1,5%.
HIV
Tuberculosis
0,6
Discounted one-off income and costs
Gene therapy
0,6
One-off income and operating costs are discounted using 25% discount rate and the net
present value of the cash flow is (€5) million.
Animal vaccines
0,7
1,9
0,7
HPV
Total milestone income
0,0
0,0
0,0
0,0
1,8
2,6
0,0
Total one-off incom e
0,0
11,0
3,5
0,0
1,8
6,1
0,0
Total costs
2,0
2,5
4,0
5,0
5,0
5,0
5,0
-2,0
8,5
-0,5
-5,0
-3,2
1,1
-5,0
5,4
-0,3
-2,0
-1,0
0,3
-5,7
One-off income and costs
Discount rate
Discounted cash flow
25 %
-1,6
Value of one-off incom e and costs
Source: Company, FIM
2020 Terminal
Signing income
-4,9
12
Valuation
Comparables
Comparable valuation based on market potential
Valuing early stage biotechnology companies with relative valuation (market or transaction
multiples) is very challenging as these companies commonly have limited revenues,
negative profitability and low or negative book value of equity.
In order to perform an indicative relative valuation we have compared FIT Biotech market
potential to similar early stage medical companies in the Nordic region. The market
potential is based on estimates derived from comparable company prospectus, industry
players or FIT Biotech management. The market potential is adjusted based on the phase
of the application (i.e. probability adjustment).
The enterprise value (EV) is divided by sum of probability weighted applications of the
comparable company. The lower and upper quartile range of the multiple is very wide 4,8x
– 29,6x and the FIT Biotech multiple of 3,3x – 7,3x falls in the lower range. Although the
method does not take into account the market share potential of each application it gives
some guidance on the relative value of the GTU innovation.
Comparable valuation
Company
Herantis
Nexstim
Eurocine
Bionor Pharma
Biotie Therapies
Cantargia
Propability
w eighted
potential
Application
Eyedrops
Phase I
2,2
20,7 %
Parkinson
Pre-clinical
3,2
8,3 %
Secondary lymphedema
Pre-clinical
0,5
8,3 %
Stroke rehabilitation
Phase III
1,6
57,6 %
Mapping of the motor cortex Launched
0,1
100,0 %
Influenza
Phase III
5,7
57,6 %
Pneumoccoccal
Pre-clinical
4,0
8,3 %
HIV
Phase II
17,5
27,6 %
Influenza
Pre-Clinical
5,7
8,3 %
Alcohol dependence
Launched
1,0
100,0 %
Parkinson
Phase III
3,2
57,6 %
Parkinson
Phase II
3,2
27,6 %
Inflammation
Phase I
n.a.
20,7 %
Cancer
Pre-clinical
70,0
8,3 %
Sum of
Enterprise
EV /
propability
value (EUR Market
w eighted
million)
potential
applications
0,8
25
33,2 x
1,0
50
48,1 x
3,6
4
1,1 x
5,3
55
10,4 x
3,7
70
18,9 x
5,8
17
2,9 x
Upper quartile
29,6 x
Median
14,6 x
Low er quartile
4,8 x
FIT Biotech
Source: Company, Comparable companies prospectus, Lundbeck, FIM
Market
potential
(EUR billion)
Development
phase
HIV
Phase II
17,5
27,6 %
Tuberculosis
Pre-clinical
7,0
8,3 %
Animal vaccines
Pre-clinical
5,2
8,3 %
Gene therapy
Pre-clinical
61,0
8,3 %
HPV
Pre-clinical
1,7
8,3 %
11,1
37 - 81
3,3 x 7,3 x
13
Valuation
Recent deals in therapy development
Date
Signing
fees ($m)
Milestone
fees ($m)
Total deal
value ($m)
Comments
Adeno
Associated
Virus Vector
20
232
252 +
royalties
Royalties are not disclosed
but are included in the deal
Preclinical
Adeno
Associated
Virus Vector
20
260
280 +
royalties
Royalties are double tier
CNS
diseases
Preclinical /
phase I
Adeno
Associated
Virus Vector
65
745
810 +
royalties
Royalties are not disclosed
but are included in the deal
BristolMyers
Squibb
Cardiovascular
diseases
Preclinical /
phase I
Adeno
Associated
Virus Vector
95
471
566 +
royalties
Royalties are single to
double-digit
Janssen
(Johnson &
Johnson)
Hephatitis B
Phase I
Electroporation
n/a
n/a
85 +
royalties
Royalties are not disclosed
but are included in the deal
Licensor
Licensee
Dimension
Therapeutics
Bayer
12/2014
Spark
Therapeutics
02/2015
Target
disease
Phase
Vector
Hemophilia
A
Preclinical
Pfizer
Hemophilia
B
Voyager
Therapeutics
Genzyme
(Sanofi)
04/2015
uniQure
04/2015
Ichor Medical
Systems
07/2014
Recent deals in therapy development
There has been several licensing deals with large pharmaceutical companies in gene therapy related therapies. The table above highlights some of the most relevant recent deals and
the key components.
In addition to licensing deals we highlight that a privately held US company REGENXBIO has received significant financing during 2015. REGENXBIO raised $30 million equity financing
in January and 70,5 million mezzanine financing in May. REGENXBIO has developed a proprietary technology (NAV) based on adeno-associated viral (AAV) vector. REGENXBIO is
mostly licensing the NAV technology to partners and we see its business model and vector technology focus to be similar to FIT Biotech.
Source: Company, public news sources
14
Valuation
HIV and Tuberculosis
Key assumptions behind the estimates - HIV
Key assumptions behind the estimates – Tuberculosis
The market size for HIV pharmaceuticals is estimated to be 17,5 billion euros. The market
is relatively mature and the growth rate is estimated to be 1,5%. The market share is
expected to be relatively high 14% due to the significantly lower cost of the application in
relation to current treatments. Royalty rate of 7% reflects the advanced phase II/a
development phase. Probability of licensing is 70%. Commercialization date is expected to
be 2020. The applied discount rate is 25%.
The market size for tuberculosis vaccines is estimated to be 7,0 billion euros. The market
growth rate is estimated to be 3,5%. The market share is expected to be relatively low 5%
as the vaccine is a treatment vs. current preventive vaccines. Royalty rate of 6% reflects
the lower potential mostly in developing counties such as China. Probability of licensing is
70%. Commercialization date is expected to be 2019. The applied discount rate is 25%.
Discounted royalty and market share - HIV
Discounted royalty and market share - Tuberculosis
Sensitivity analysis - HIV
Sensitivity analysis - Tuberculosis
2019
2020
2021
2023
21 %
62,1
52,1
43,7
36,6
25,8
23 %
53,0
43,8
36,1
29,8
20,3
25 %
45,6
37,0
30,0
24,4
16,1
27 %
39,4
31,5
25,1
20,1
12,8
29 %
34,2
26,9
21,2
16,7
10,3
Source: Company, FIM
Top market share
MEUR
Year of commercialization
MEUR
30,0
10 %
12 %
14 %
16 %
18 %
1,6
2017
2018
2019
2020
2022
-0,5 %
19,7
22,4
24,5
26,5
28,1
21 %
3,2
2,7
2,3
1,9
1,4
0,5 %
21,8
24,7
27,1
29,3
31,2
23 %
2,7
2,3
1,9
1,6
1,1
1,5 %
24,0
27,3
30,0
32,5
34,7
25 %
2,4
2,0
1,6
1,3
0,9
2,5 %
25,4
28,9
31,9
34,5
36,8
27 %
2,1
1,7
1,4
1,1
0,7
3,5 %
27,0
30,7
33,8
36,6
39,1
29 %
1,9
1,5
1,2
0,9
0,6
Initial market growth
MEUR
2018
Discount rate
Year of commercialization
30,0
Initial market growth
Discount rate
MEUR
Top market share
1,6
1%
3%
5%
7%
9%
1,5 %
0,4
1,1
1,4
1,7
1,8
2,5 %
0,5
1,1
1,5
1,8
2,0
3,5 %
0,5
1,2
1,6
1,9
2,1
4,5 %
0,5
1,2
1,7
2,0
2,2
5,5 %
0,5
1,3
1,8
2,1
2,3
15
Valuation
Gene therapy and animal vaccines
Key assumptions behind the estimates – Gene therapy
Key assumptions behind the estimates – Animal vaccines
The potential market size for gene therapy is estimated to be 61 billion euros. The market
is developing very fast and the growth rate is estimated to be 12%. The market share is
expected to be relatively low due to the high competition and wide range of applications.
Royalty rate of 7% reflects high interest in gene therapy applications. Probability of
licensing is 70%. Commercialization date is expected to be 2019. The applied discount
rate is 25%.
The market size for animal vaccines is estimated to be 5,2 billion euros. The market is
growing rapidly and the growth rate is estimated to be 8%. The market share is expected
to be 6% due to wide range of applications in the market. Royalty rate applied is 6%.
Probability of licensing is 80%. Commercialization date is expected to be 2019. The
applied discount rate is 25%.
Discounted royalty and market share – Gene therapy
Discounted royalty and market share – Animal vaccines
Sensitivity analysis – Gene therapy
Sensitivity analysis – Animal vaccines
25,9
2017
2018
2019
2020
2022
21 %
48,0
42,0
36,5
31,6
23,3
23 %
41,5
35,8
30,7
26,1
18,7
25 %
36,1
30,7
25,9
21,7
15,1
27 %
31,6
26,5
22,0
18,2
12,3
29 %
27,8
22,9
18,8
15,3
10,0
Source: Company, FIM
Top market share
MEUR
Year of commercialization
MEUR
25,9
1%
3%
5%
7%
9%
2,5
2017
2018
2019
2020
2022
10,0 %
6,6
16,6
23,3
27,6
30,3
21 %
4,6
4,0
3,5
3,0
2,2
11,0 %
6,9
17,5
24,6
29,2
32,0
23 %
4,1
3,5
2,9
2,5
1,7
12,0 %
7,3
18,4
25,9
30,8
33,8
25 %
3,6
3,0
2,5
2,1
1,4
13,0 %
7,6
19,3
27,3
32,5
35,7
27 %
3,2
2,6
2,2
1,8
1,2
14,0 %
8,0
20,3
28,8
34,3
37,7
29 %
2,8
2,3
1,9
1,5
1,0
Initial market growth
MEUR
Discount rate
Year of commercialization
Initial market growth
Discount rate
MEUR
Top market share
2,5
2%
4%
6%
8%
10 %
6,0 %
0,9
1,7
2,3
2,7
3,1
7,0 %
1,0
1,7
2,4
2,9
3,3
8,0 %
1,0
1,8
2,5
3,1
3,5
9,0 %
1,1
1,9
2,6
3,2
3,7
10,0 %
1,1
2,0
2,8
3,4
3,9
16
Valuation
HPV
Key assumptions behind the estimates – HPV
The market size for HPV vaccines is estimated to be 1,7 billion euros. The market is
relatively mature and the growth rate is estimated to be 1,5%. The market share is
expected to 15%. Royalty rate is 6%- Probability of licensing is 70%. Commercialization
date is expected to be 2023. The applied discount rate is 25%.
Discounted royalty and market share – HPV
Sensitivity analysis – HPV
Year of commercialization
MEUR
0,7
2021
2022
2023
2024
2026
21 %
1,5
1,2
1,0
0,9
0,6
23 %
1,2
1,0
0,8
0,7
0,5
25 %
1,0
0,8
0,7
0,6
0,4
27 %
0,9
0,7
0,6
0,4
0,3
29 %
0,7
0,6
0,5
0,4
0,2
Source: Company, FIM
Initial market growth
Discount rate
MEUR
Top market share
0,7
11 %
13 %
15 %
17 %
19 %
1,0 %
0,5
0,5
0,6
0,6
0,7
2,0 %
0,5
0,6
0,6
0,7
0,8
3,0 %
0,5
0,6
0,7
0,7
0,8
4,0 %
0,6
0,6
0,7
0,8
0,9
5,0 %
0,6
0,7
0,8
0,8
0,9
17
Disclaimer
This report has been made by FIM Investment Services Ltd. The information in this report is based on publicly available data and information from various sources deemed reliable, but has not been independently
verified by FIM Investment Services Ltd and/or its affiliate(s), (herein referred collectively to as FIM), which therefore does not guarantee that the information is comprehensive and accurate.
All views expressed herein are those of the author(s) at the time of writing and may change without notice. FIM holds no obligation to update, modify or amend this publication or to otherwise notify a reader or
recipient of this publication in the event that any matter, opinion, projection, forecast or estimate contained herein changes or subsequently becomes inaccurate.
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